The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

-What is the labor efficiency variance for the month?
A)$7,230 U
B)$9,030 U
C)$7,230 F
D)$9,150 U

Question

The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

-What is the labor efficiency variance for the month?
A)$7,230 U 
B)$9,030 U 
C)$7,230 F 
D)$9,150 U

Quizplus · Accepted Answer

The labor efficiency variance is the difference between the actual labor hours used and the standard labor hours allowed for the actual output produced. The actual labor hours used are 12,000 hours, and the standard labor hours allowed are 10,000 hours. Therefore, the labor efficiency variance is 12,000 - 10,000 = 2,000 hours. The labor rate is $15 per hour, so the labor efficiency variance is 2,000 hours * $15 per hour = $30,000. The labor efficiency variance is unfavorable because the actual labor hours used were greater than the standard labor hours allowed.

The Following Labor Standards Have Been Established for a Particular